TaxTMI 
TaxTMI 
2013 (1) TMI 926
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....t necessary to take immediate action. Now, therefore, in exercise of the powers conferred by sub-section (1) of Section 8A of the Customs Tariff Act, the Central Government hereby directs that the First Schedule of the said Customs Tariff Act shall be amended in the following manner, namely :- In the First Schedule to the said Customs Tariff Act, in Section XI in Chapter 52, against Heading 52.01 occurring in Column (2), for the entry in Column (4), the entry "10%" shall be substituted. 2. This Notification shall come into force on the 9th day of January, 2002." 2. Almost all the petitioners are textile mills situated in different parts of the State. The raw material used by them is cotton and much of their cotton input is by way of imports. The present dispute revolves around the period December, 2001 to January, 2002. Many of the petitioners had entered into contracts with foreign suppliers for purchase of cotton and based on such contracts, shipments were already made and in some cases goods were in transit. Prior to the issuance of Notification No. 2/2002-Cus., dated 8-1-2002, the rate of duty in respect of the goods falling under First Schedule to the Cus....
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....osen to file a counter-affidavit refuting the plea taken in the writ petitions and further there is no explanation as to why the notification came to be issued and under what circumstances. It is at the instance of this Court that certain clarifications were submitted by way of letter correspondence to show that the notification was placed before the Parliament for its approval, which is the requirement of Section 7 of the Customs Tariff Act, 1975. The original file was never produced before this Court, even though specific orders were passed by this Court from time-to-time to produce it. The orders dated 19-11-2012 and 21-12-2012 passed by this Court read as under : "19-11-2012 The notification bearing No. 2/2002-Cus., dated 8-1-2002 was issued by the Ministry of Finance, Department of Revenue, Government of India by exercising the emergency power under Section 8A of the Customs Tariff Act, 1975 increasing the rate of import duty leviable on Cotton. 2. Mr. R. Thiagarajan, learned Senior Counsel draws analogy to Section 25(2) of the Customs Act, 1962 and submits that the satisfaction of the Central Government supported by reasons is sine qua non for issuing a notifica....
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....counter-affidavit has been filed by the Customs Department on insistence by this Court, in December, 2012 stating that the said counter-affidavit is filed for and on behalf of all the respondents. When the Union of India is not in a position to produce the file relating to the passing of the impugned notification and when there is no material available on record, it is not clear as to how the Customs Department received instructions from the Ministry of Finance, Department of Revenue so as to file a counter-affidavit. It is apparent that the counter-affidavit filed for and on behalf of the Ministry of Finance, Department of Revenue is not based on any materials. All that the counter-affidavit refers to is the placing of the materials before the Parliament. Therefore, it can be safely assumed that no effective counter-affidavit has been filed by the Ministry of Finance, Department of Revenue. 7. The Customs Department, on its part, relies upon the proceedings said to be placed before the Parliament to show that in response to starred questions by some members, the matter was placed before the Parliament and it was approved and, therefore, the notification is valid. 8.&ems....
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....efore the House of the People and if Parliament makes any modification in the notification or directs that the notification should cease to have effect, the notification shall thereafter have effect only in such modified form or be of no effect, as the case may be, but without prejudice to the validity of anything previously done thereunder. (4) For the removal of doubts, it is hereby declared that any notification issued under sub-section (2), including any such notification approved or modified under sub-section (3), may be rescinded by the Central Government at any time by notification in the Official Gazette." 10. From the little letter correspondence which are the materials produced subsequent to the direction of this Court there can be no quarrel that the notification was laid before the Parliament. Therefore, the Court is not going into the issue whether the notification was appropriately placed before the Parliament for its approval or not. The question for consideration is whether the Central Government at the time of issuing the notification invoking the emergency power under Section 8A(1) of the Customs Tariff Act, 1975 was satisfied that the import duty ....
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....ay further be questioned on the ground that it is contrary to some other statute. That is because subordinate legislation must yield to plenary legislation. It may also be questioned on the ground that it is unreasonable, unreasonable not in the sense of not being reasonable, but in the sense that it is manifestly arbitrary. In England, the Judges would say "Parliament never intended authority to make such rules. They are unreasonable and ultra vires". The present position of law bearing on the above point is stated by Diplock, L.J. in Mixnam's Properties Ltd. v. Chertsey Urban District Council, (1964) 1 QB 214 thus : 'The various special grounds on which subordinate legislation has sometimes been said to be void ... can, I think, today be properly regarded as being particular applications of the general rule that subordinate legislation, to be valid, must be shown to be within the powers conferred by the statute. Thus, the kind of unreasonableness which invalidates a bye-law is not the antonym of 'reasonableness' in the sense in which that expression is used in the common law, but such manifest arbitrariness, injustice or partiality that a court would say: 'Parliament never int....
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....notification issued under Section 25(1) of the Customs Act, 1962 is required to be laid before Parliament under Section 159 thereof does not make any substantial difference as regards the jurisdiction of the Court to pronounce on its validity." He contended that the notification under challenge does not conform to the statute under which it is made, besides being challenged on the ground of unreasonableness and one issued without application of mind, as relevant materials were not considered before issuing the notification. He further contended that circumstances did not exist for issuing the notification and there was no satisfaction by the Central Government before the notification was issued and, therefore, the said notification can be challenged. He submitted that mere placing of the notification before the Parliament by itself will not cure the defect and consequently it will not oust the jurisdiction of this Court to consider the validity of the notification under challenge. He relied upon Paragraph (79) of the above said judgment in support of the last contention raised. Even though Indian Express Newspapers case, supra, is a case of exemption under Section 25(2) of the C....
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....empted from part of the customs duty.' 10. The reasons set forth in this statement have been analysed by learned counsel for the private importers and an attempt has been made to establish that there is no justification for relying on the international prices of vegetable oils nor the stated desirability of keeping the domestic prices of vanaspati at reasonable levels as grounds for making the impugned exemption orders in favour of the State Trading Corporation. In detailed argument, learned counsel for the private importers urges that the public interest which could be contemplated under Section 25(2) must be the reduction of the landed cost in order to reduce the domestic prices of the oils. That object, it is said, is not served by conferring an advantage upon a particular importer even if it be the State Trading Corporation, who is engaged in the same activity in respect of the same goods. It is pointed out that the concession must relate to the goods and not to the personality of the importer. Further, it is argued, the allegation that the international prices of edible oils were high is inconsistent with the reality of the situation; on the contrary, it is pointed out....
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..... Escorts Ltd., (1986) 1 SCC 264. There is no rational basis, it is urged, for making a distinction in the imposition of customs duty in respect of the goods imported by the private importers and the State Trading Corporation as both purchased the same commodity in the open market for direct consumption, that the sales effected by them are on a commercial basis, and there is nothing to show that the State Trading Corporation sold these oils at a price lower than the market price or at subsidised prices. It is asserted that the Central Government, like any other importer, is liable to customs duty, and we are referred to Section 12 of the Customs Act. It is also complained that the differential proceeds on excessive classification, and that results in violating the doctrine of equality enshrined in Article 14 of the Constitution. Reliance is placed on State of J. & K. v. T.N. Khosa, (1974) 1 SCC 19, Mohd. Shujat Ali v. Union of India, (1975) 3 SCC 76 and In re The Special Courts Bill, 1978, (1979) 1 SCC 380. And, finally, the private importers claim that inasmuch as approximately 17 lakh tonnes of oil were imported by the State Trading Corporation as against a mere 1 lakh tonnes of ....
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....he said decision, which makes that proposition clear, is as under : "33. Before I deal with the said issue I may dispose of the question whether the provision of Article 74(2) of the Constitution permits withholding of the reasons and material forming the basis for the ministerial advice tendered to the President. Article 74(1) ordains that the President 'shall' act in accordance with the advice tendered by the Council of Ministers. The proviso, however, entitles him to require the Council of Ministers to reconsider its advice if he has any doubts or reservation but once the Council of Ministers has reconsidered the advice, he is obliged to act in accordance therewith. Article 74(2) then provides that "the question whether any, and if so what, advice was tendered to the President shall not be inquired into in any Court". What this clause bars from being inquired into is "whether any, and if so what, advice was tendered" and nothing beyond that. This question has been elaborately discussed by my learned colleagues who have examined in detail its pros and cons in their judgments and, therefore, I do not consider it necessary to traverse the same path. It would suffice to say ....
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....essary for taking immediate action for issuing the said notification for enhancement of rate of duty. Despite ordering of rule nisi by this Court, the Ministry of Finance, Department of Revenue is not in a position to satisfy this Court that the above two contingencies required under Section 8A(1) of the Customs Tariff Act, 1975 existed for issuance of the notification in question. 15. Though the decisions of the Supreme Court in Indian Express Newspapers and M. Jhangir Bhatusha and Others cases, supra, are relating to exemption under Section 25(2) of the Customs Act, 1962, the principle laid down in those decisions that there should be materials available for the Government while exercising its power to grant or not to grant exemption under the notification is squarely applicable to the case on hand. These decisions also lay down the proposition that the requirement under the statute should be satisfied before ever such notification is issued. In the case on hand, when a specific challenge has been made, the first respondent is unable to satisfy the Court that there was sufficient material before the Central Government to satisfy itself that import duty leviable under Sect....
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....he second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to court on account of a challenge, get validated by additional grounds later brought out. We may here draw attention to the observations of Bose, J. in Gordhandas Bhanji, AIR 1952 SC 16 : 'Public orders, publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to affect the actings and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself.' Orders are not like old wine becoming better as they grow older." 19. Paragraph (36) of the decision in S.N. Mukherjee case, supra, reads thus : "36. Reasons, when recorded by a....